Making 'Ends' Meet at Small Inns & Hotels

Local Inns in Bali Unable to Compete with City Hotels are Often Resorting to ‘Short Time’ Guests to Fill Their Rooms

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(4/21/2013)

Small Inns or “Hotel Melati” are an important sector of the economy for many indigenous Balinese. Bali’s accommodation building boom and the advent of low-priced city hotels have made it increasingly difficult for Hotel Melati to achieve viable occupancy, forcing some to resort to seek customers from the nefarious “short-stay” market.

According to Bisnisbali.com, 2011 data provided by the Bali Tourism Service (Dinas Pariwisata) counts the number of Hotel Melati operating in Bali at 1,026 comprising 20,199 rooms.

Meanwhile, Hotel Melati operating in Bali’s capital city of Denpasar in 2011 is put at 191 hotels with 4,287 rooms.

This large inventory of rooms is cited as the cause of intense competition between the Island’s small hotel operators. Desperate for business, these small hotels have few other resources than to compete on price.

The operational manager of Hotel Taman Wisata, Wayan Rajin, whose hotel is in downtown Denpasar, says his occupancy levels patterns follow seasonal trends. A mainstay of his business are local student groups undertaking study tours to Bali or families coming to the island to celebrate the New Year and Idul Fitri holidays. During these periods, the Hotel Taman Wisata can achieve occupancies of between 50-80%. Outside these peak periods, occupancy plummets to as low as 10%.

The hotels tariff at Hotel Taman Wisata ranges from between Rp. 50,000 to Rp. 75,000 (US$5 – US$7.50) per night per room.

In addition to accommodating traders on short business visits to Bali, some Hotel Melati are popular for 1 night stays or even shorter visits of 2-3 hours.

Those visiting Hotel Melati for only a few hours include both young unmarried couple, husbands and wives, and couples engaged in extra-marital relations.

Wayan Rajin told Bisnisbali.com that the unfavorable image of Hotel Melati is not absolutely correct. He defended the small hotel sector, saying that the facilities offered to all guests remain the same and the hotel operators are unable to monitor or control what goes on behind closed doors.

The vice-chairman of the Indonesian Hotel and Restaurant Association (PHRI-Bali), Nyoman Suwidjana, complains that Hotel Melati are finding it difficult to compete against the new City Hotels that are propagating urban centers in Bali. Suwidjana said the Hotel Melati room dimensions are small and difficult to renovate to become long-stay hotels or luxury boarding houses. He said that in the face of strong competition the Hotel Melati could be converted to backpacker hotels and inns for small-scale traders with limited travel budgets.

The PHRI official expressed concerns that when Melati Hotels are forced to resort to the “short time” market sector they will cause damage to their own branding and image that will prove difficult to repair later and is badly out of step with Bali’s goal to promote itself as a cultural destination.